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General Mills, Inc. (GIS - Free Report) is scheduled to release first-quarter fiscal 2019 results on Sep 18. This global manufacturer and marketer of branded consumer foods delivered a positive earnings surprise of 8.2% in the last reported quarter, though it has a mixed surprise record in the trailing four quarters.

General Mills has been witnessing organic sales growth for three straight quarters now, on the back of solid innovation, effective marketing and in-store execution. In the fourth quarter of fiscal 2018, the company’s organic sales rose 1%, fueled by organic net price realization and mix in all segments. This helped drive the top line, which reverted to growth in fiscal 2018. Notably, the company remains on track to reshape its portfolio, which is evident from its buyout of the fast-growing and profitable Blue Buffalo business. Also, management remains focused on its Consumer First strategy and is working toward its global growth plans to enhance sales momentum.

Talking of global strategies, the company plans to focus more on growing cereal business and restructure its U.S. yogurt portfolio, which has been experiencing sluggish sales since the last few quarters. Further, the company is focused on driving differential growth across several global platforms, wherein it has already witnessed solid revenue (roughly $4 billion) momentum. These platforms include Haagen-Dazs ice cream, snack bars (primarily under Nature Valley), Fiber 1 and Larabar brands, Old El Paso Mexican foods and its natural and organic brands in North America. Investing in Foundation businesses (includes refrigerated dough, soup, and baking mixes etc.) is also a priority.

Additionally, the company is focused on improving its e-commerce channel, given its rapid acceleration. E-commerce already represents about 1.5% of the company's total sales in the United States as of fiscal 2017 and this is expected to grow 5% by fiscal 2020. All said, the company expects net sales to rise 9-10% in fiscal 2019. The Zacks Consensus Estimate for sales is pegged at $4,120 million, up 9.3% from the year-ago reported figure.

Segment wise, the consensus mark for Asia & Latin America, Europe & Australia, and North America Retail net sales is pegged at $391 million, $501 million and $2,431 million compared with the year-ago reported figures of $392 million, $492 million and $2,438 million, respectively. The consensus mark for Convenience Stores and Foodservice sales stands at $456 million, which reflects a rise of 2% from the year-ago reported figure.

Will Input Cost Inflation Play Spoil Sport?

While General Mills' sales are likely to receive a boost from the aforementioned factors, the company’s earnings picture looks somewhat troubled owing to escalated costs. In fact, General Mills’ margins remained soft in fiscal 2018 owing to input cost inflation, and rising operational and merchandise costs. The company has been battling input cost inflation for a while now, which is posing threats to many other food companies like Pinnacle Foods , Conagra Brands (CAG - Free Report) and Campbell Soup (CPB - Free Report) , among others.

Coming back to General Mills, these headwinds are anticipated to linger as the company now expects input cost inflation of 5%, a point greater than the level in fiscal 2018. In fact, management believes that the company’s overall cost-saving and revenue-driving efforts won’t be enough to compensate for the input cost inflation and additional growth investments in fiscal 2019. This also makes us cautious about the upcoming earnings announcement. Incidentally, the consensus mark for earnings has remained stable over the past 30 days at 64 cents, which shows a decline from 71 cents recorded in the year-ago period.

What Does the Zacks Model Unveil?

Our proven model doesn’t show thatGeneral Mills is likely to beat bottom-line estimates in the to-be-reported quarter. For this to happen, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with ourEarnings ESP Filter.

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